The organization of supplier networks: Effects of delegation and intermediation

Dilip Mookherjee; Masatoshi Tsumagari

doi:10.1111/j.1468-0262.2004.00529.x

The organization of supplier networks: Effects of delegation and intermediation

Dilip Mookherjee, Masatoshi Tsumagari

Faculty of Economics

Research output: Contribution to journal › Article › peer-review

63 Citations (Scopus)

Abstract

In a one-principal two-agent model with adverse selection and collusion among agents, we show that delegating to one agent the right to subcontract with the other agent always earns lower profit for the principal compared with centralized contracting. Delegation to an intermediary is also not in the principal's interest if the agents supply substitutes. It can be beneficial if the agents produce complements and the intermediary is well informed.

Original language	English
Pages (from-to)	1179-1219
Number of pages	41
Journal	Econometrica
Volume	72
Issue number	4
DOIs	https://doi.org/10.1111/j.1468-0262.2004.00529.x
Publication status	Published - 2004 Jul

Keywords

Auctions
Collusion
Delegation
Hierarchy
Intermediation
Principal-agent
Procurement

ASJC Scopus subject areas

Economics and Econometrics

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10.1111/j.1468-0262.2004.00529.x

Cite this

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KW - Principal-agent

KW - Procurement

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The organization of supplier networks: Effects of delegation and intermediation

Abstract

Keywords

ASJC Scopus subject areas

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